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DoD Proposes Tricare Hikes for Younger Military Retirees

By Gerry J. GilmoreAmerican Forces Press Service

WASHINGTON, Feb. 8, 2006  The Defense Department is proposing that working-age military retirees and their families pay higher premiums to help address rising health care costs that have doubled over the past few years, senior DoD officials said here today.

The proposed changes would apply only to eligible military retirees under age 65 and their families, officials said. There would be no change for active duty military or their families, or military retirees age 65 or older and their families.

When the Tricare health care program for active duty and retired military members and their families was established in 1995, retirees then were contributing about 27 percent of the cost of their benefit, Dr. William Winkenwerder Jr., the assistant secretary of defense for health affairs, said during an interview with Pentagon Channel and American Forces Press Service reporters at the Pentagon.

However, military health care costs doubled from $19 billion in 2001 to just over $37 billion in the 2006 defense budget, Winkenwerder said. And today's average military retiree contribution for health care coverage has dropped to about 10 to 12 percent, he said.

"Their contribution did not change, while the value of the benefit continued to rise," Winkenwerder said. If approved by Congress and signed off by the president, the proposed Tricare rate hikes for retirees under age 65 would be phased in over fiscal 2007 and 2008. That should bring up younger retirees' share of Tricare costs closer to the 1995 level, he said.

By comparison, Winkenwerder said, civilians under private plans generally pay between 35 and 40 percent of their health care costs.

The current Tricare Prime annual enrollment fee for retirees is $230 for individuals and $460 for families for both enlisted and commissioned military retirees, according to DoD documents. The proposed changes would increase Tricare Prime enrollment fees for junior enlisted retirees at pay grades E-6 and below to $325 per individual and $650 for families by October 2008.

Enlisted retirees at pay grades E-7 and above would pay $475 for individuals and $950 for families by October 2008 under the proposed changes. And retired officers of all ranks would pay $700 per individual and $1,400 per family.

After that, the share of health care costs paid by military retiree would be indexed to the Federal Employees Health Benefits Program that covers federal workers and retirees.

If nothing is done now, then DoD could be paying $64 billion for military health care in 2015, Marine Gen. Peter Pace, chairman of the Joint Chiefs of Staff, said today during his testimony before the House Armed Services Committee.

Another reason for increased DoD health care costs, Pace told the committee, is that many younger military retirees are using their Tricare health care benefits at the behest of their civilian employers, rather than access company health plans.

Finding ways to manage increased military health care costs "is something we just have to face up to, because it's an enormous amount of money," Defense Secretary Donald H. Rumsfeld, at the same House hearing with Pace, said to committee members.

The alternative to not raising rates, Winkenwerder said, would be to degrade a first-class benefit for retired military members and their families.

"You can see our benefit is a much better benefit, and we want to keep it that way," Winkenwerder said.